[2024] UKUT 51 (LC)

The claimant is a familiar litigant in Code references. It is a Code operator, but does not operate a mobile telephone network; it is an infrastructure provider, building and maintaining masts and other apparatus for the use of mobile network providers. Typically, the mobile network operators attach their antennae to the claimant’s masts.

The respondent is of course a household name and the principal provider of fixed line telephone and data services in the UK. It owns thousands of telephone exchanges all over the country, most of them built in the 1920s and 1930s when the telephone network was rolled out to the general population. They were reinforced at construction with a steel infrastructure because the exchange equipment that they contained was immensely heavy. They were designed to blend with the surrounding architecture (rather like the TARDIS) and we tend to walk past without noticing them.

The subject of this reference is the telephone exchange on Kenton Park Parade, Kenton Road, Harrow. We visited it the day before the hearing. It is built of red brick like the parade of shops beside it, and is quite an imposing building with some nice Arts and Crafts touches, over three storeys under a flat roof, and with a car park at the back. Built in the 1920s, it is a typical example of reinforced construction to support the heavy switching equipment which used to fill its first and second storeys. There is a jib on the roof and large doors on the upper floors so that equipment can be winched in, and there are extensions at the back to accommodate cooling equipment. The ground floor contains offices, store rooms, a kitchen, a dining room or common room, and a large games room with a once-splendid billiard table; there are toilets on all floors. There is a boiler and further storage space in the basement.

The heavy equipment that telephone exchanges were built to house is becoming obsolete as telephone technology advances. The Kenton Road exchange is a tired and largely empty building; it still contains significant amounts of equipment, albeit smaller in scale than originally following digitisation, on the first and second floors but there are big empty spaces. The cooling system has gone. There are no staff stationed there, the offices are empty and the games room is dusty and sad. There is still a kettle and microwave in the kitchen, though, and the building is used by engineers working in the area to store equipment and to take breaks.

The respondent has been making arrangements for some years to close telephone exchanges; the following account is taken from counsel’s submissions and from the unchallenged evidence of Mr Donald Sellar, a Senior In-House Commercial Lawyer for the respondent.

In 2020 the respondent consulted on its plans to close at least 100 superfluous exchanges by December 2030, the Kenton Road exchange among them, and about 4,400 more in the early 2030s. OFCOM has approved the closure programme. The respondent has re-structured its title to the Kenton Road and other exchanges so as to be able to divest itself of them.

The respondent holds the freehold of the Kenton Road exchange. In 2001 it granted a long lease of this and a number of other exchanges to Autumnwindow Limited (“AW”), its wholly-owned subsidiary, which holds that lease upon trust for Telereal Trillium Group (“Telereal”). Below that lease are two subleases, of which we need not set out the detail; we can summarise by saying that the respondent has taken a lease back from AW, the terms of which enable it to continue operating the exchanges for as long as it needs to and then to surrender them – individually or in groups - when it chooses to do so, provided that it surrenders them with vacant possession. “Vacant possession” is defined in the relevant agreement so as to make it clear that all telecommunications equipment must be removed, including what is on the roof. Following surrender, the land will be used for development by Telereal.

The Kenton Road exchange, being a little taller than its neighbours and having a flat roof, is an attractive site for mobile telephone apparatus, and for many years mobile operators have had equipment on the roof by agreement with the respondent. Since 2000 the claimant has managed these installations on the respondent’s behalf. On 1 January 2021 the respondent granted to the claimant a lease (“the OT Lease”) of a number of properties including part of the roof of the Kenton Road exchange (“the Site”) for a term expiring on 14 November 2030 at a peppercorn rent, with an option to renew in 2030 and 2040, again at a peppercorn rent. The OT Lease gave the claimant the right to put telecommunications apparatus on the Site. It was granted out of the respondent’s leasehold title to the Kenton Road exchange.

The OT Lease, as we said above, covers a number of properties. We can make decisions about it in this reference only insofar as it relates to the Site; we have no information about the other land to which it relates. We have to decide whether it is a Code agreement in relation to the Site, and our decision on that point is not a decision about the OT Lease insofar as it relates to any other land. Therefore we use the term “the Site Lease” to mean the OT Lease insofar as it relates to the Site.

By the time the OT Lease was granted the respondent’s plans for divesting itself of telephone exchanges were well-developed, and unsurprisingly, in light of those plans, the OT Lease contains provision for the landlord to bring it to an early end in respect of any of the individual sites demised.